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Euler Hermes, the world’s biggest trade credit insurer, has stopped covering exporters shipping to Greece because of the mounting risk of not getting paid in the event the debt-laden nation is forced out of the euro.

“Euler Hermes has decided no longer to cover deliveries to Greece for the foreseeable future,” a Euler Hermes spokesman told Reuters today. Existing contracts will be honored, but Euler Hermes will not underwrite any new Greek business, the spokesman said, adding that the insurer would reconsider “as soon as the situation improves.”

A Greek exit from the eurozone would force companies there to revert to the drachma, which would likely fall sharply against the single currency to reflect Greece’s fiscal crisis. That would restrict Greek importers’ ability to pay euro-denominated invoices, potentially inflicting big losses on their European suppliers.

Euler Hermes had warned last week that it might restrict cover for Greece-bound exports. Trade insurers have been reviewing their Greek exposure ahead of the country’s June 17 general election, amid fears victory could go to parties that oppose spending cuts agreed as part of an international bailout deal, hastening a euro exit.

“It’s a watershed -- everyone’s watching what happens and trying to make contingency plans,” said Richard Talboys, head of political and trade credit risk at insurance broker Willis. “There are smoke and flames coming out of Greece, but we don’t know if it can be put out, or if the Greeks will pour oil on it by voting against restructuring and austerity.

Trade credit insurers have also been trimming their exposure to Spain and Italy, heavily-indebted and mired in recession, although not immediately at risk of quitting the euro, said Vincent McCue, trade credit client team leader at insurance broker Marsh. “What we’ve seen in terms of Italy and Spain is that trade credit, which is effectively the oxygen of business, is being slowly turned down,” he said.

Trade credit insurers were criticised during the 2008 crisis for abruptly withdrawing cover, disrupting supply chains and forcing several European governments to plug the gap with state-backed insurance schemes. The industry has since tried to build up better data on their customers’ trade partners to gauge the risk of non-payment more accurately and avoid the need for rapid adjustment during economic or financial market crises.

Euler Hermes, majority-owned by German insurer Allianz , insured export deals worth 702 billion euros ($880.03 billion) last year. The company’s operating assumption is that Greece will stay in the eurozone, its spokesman said. Most European export deals are uninsured. About 15 percent of British exporters buy trade credit insurance, compared with about 25 percent in export-focused Germany, according to informal estimates from industry sources.

Greece imported 45.6 billion euros’ worth of goods last year, more than double the 20.2 billion it exported, according to International Monetary Fund figures.

The reduced availability of trade credit insurance for Greece could make it harder for Greek manufacturers to source imported components and raw materials, Marsh’s McCue said. No one at Atradius, the second-biggest trade credit insurer, was immediately available for comment. The company said last week it was still underwriting Greek business on a “very selective” basis.